[cousin_it]

I'd like to better understand the concept of "unimproved land value" vs. "improvements".

For example, let's say there's a neighborhood of people who are quite poor but charitable toward one another. So they build nice gardens accessible for free, little galleries, drinking fountains and so on. As a result, other people want to move in, land value in the community increases, and eventually the original inhabitants can't pay the Georgist tax anymore and lose the land. And of course none of them can take the improvements they've made and transplant them somewhere else, it's just a total loss. Their own charity and neighborliness spelled their doom, even though they made the area attractive in the first place. What gives?

[onlyrealcuzzo]

The inhabitants don't lose.

Play your scenario out.

A bunch of poor people buy 100 acres of land for $1, and they turn it into a paradise.

It becomes cool, so rich hipsters wanna buy up chunks to Instagram it.

The first person sells a patch of land he bought for $0.01 for $1M. Suddenly, property tax on everyone's $0.01 parcels shoots up from $0 to $12,000 per year.

These people have no jobs, so they can't afford $12,000 in taxes per year, so they're all forced to sell their properties to other hipsters on Instagram for $1M, too.

Well guess what?

Now they're millionaires.

I mean, technically, not. They've got some taxes to pay. But you get the idea.

No owners "lose" from property values shooting through the roof. ESPECIALLY not leveraged owners (mortgage holders).

[rufus_foreman]

The value you put on living around your family and friends in this scenario is zero.

That's not how normal people value those things.

[derac]

People hate to hear this but noone has a right to live somewhere indefinitely.

Logically, this doesn't even work. Lets say everyone in LA wants to live there with their children and their children's children and so on forever. Extrapolate this a few generations and eventually you will have a solid mass of humans 1000 ft tall. (This is a hyperbolic joke, you get the point)

[mjmahone17]

Yeah I don’t see what’s wrong with your (in my mind) utopic vision. Everyone who wants to live in a mass of humanity 1000 ft tall should be able to afford to live in that mass, and we should be researching ways to make it more and more affordable.

The only way it doesn’t work is if the community makes it impossible for more new people to get in, or if there isn’t enough economic opportunity to support all the people living there. But people don’t generally want to move into communities where they can’t find work, and I see no good reason we should enforce minimum lot and zoning laws to prevent people from moving to where opportunity lives.

[derac]

I do think they should get rid of prop 13, demolish all single family homes, and replace them with high-density buildings. What many people mean however, is that they want to continue to live there in the same single-family house forever. This is why prop 13 exists in the first place.

[robocat]

> demolish all single family homes

Ahhhh, brutalism . . . “The Soviets decided to pass: the plan was too extreme and destructive of existing institutions even for Stalin. Undeterred, Le Corbusier changed the word “Moscow” on the diagram to “Paris”, then presented it to the French government (who also passed). Some aspects of his design eventually ended up as Chandigarh, India.”

https://slatestarcodex.com/2017/03/16/book-review-seeing-lik...

[jelliclesfarm]

High density housing will not work in places with a high standard and quality of living. It will certainly erode individual rights, create environmental decline and infringe upon privacy.

In developed countries, high density housing will either make the city unbearably expensive(NYC) or bring down quality of life.(SF)

High density is a sign that resources are scarce but demand for them has increased. The sign of a well functioning and professional state is one that has a healthy middle class and enjoys low density sustainable standard of life.

Often the case for high density housing is married to sustainability goals. But sustainability goals exist in the first place because resources are scarce and it is becoming difficult to live in a sustainable manner.

The rational solution is to place a moratorium upon expansion of the city and the population. Only in Bizarro World would the logic of cramming more people even more densely in the name of sustainable design would make sense.

The true scarcity mentality is with governing bodies and elected officials who do not have the vision, integrity or collective access to more than one brain cell. They fail to create networked sustainable communities and manipulate their vote banks.

One might choose to be fair and honest to admit that calls for high density housing is often where successful immigrants congregate due to their employment. Often said immigrants are on work visas and often are not eligible to vote in local/national elections.

Is it a coincidence that elected officials impose high taxes only in certain cities/counties and extract every dollar they can squeeze from a work force who are cuffed to their visa sponsored high paying jobs? The golden goose is slaughtered and well done. Stick a fork in it and let the taxes drip.

There are no high density initiatives in Visalia, CA. Only in Bay Area. Because why build infrastructure and public transport when you can keep taxing those who can’t even vote in the first place. At least in CA, it’s win-win over and over.

Every city that has a highly paid immigrant work force is on the chopping block and will start passing high density housing initiatives. Success must be penalized..it seems. Affordable housing is subsidized housing. And who subsidizes it? The developers will tack that cost to the market value homes. Which would..surprise!..create more unaffordable cities. It’s a vicious cycle that should obvious to most who pay mortgages for all of their working lives.

[antman]

   People hate to hear this but noone has a right to live somewhere indefinitely

I am sure you feel it made sense when you wrote it, or the example explained it in any way. I absolutely failed to understand the common knowledge aspect about people's limits to their ownership rights or even understand the sequence of events or mathematical explanation of the example.

[derac]

Over time, the number of people that can lay claim to their right to live in LA forever will/could grow exponentially. The space is limited. Particularly so when you have prop 13. These two facts are incompatible. What you will get in reality is an ever-ballooning housing price, pushing everyone else out and single-family home owners locking in their "right" to the space through market-distorting laws like prop 13.

I ask you this, why do the people living in LA have more of a right to be there than the native Indians that were there 500 years ago?

[antman]

How is the potential problem of housing future people an argument for a policy that allows kicking out existing owners? They don't seem to me related. This is about the rights of ownership.

The problems you mention stem from various "kick out" policies that are essentially forced assets transfer and artificial scarcity policies to inflate prices (difficulty for new housing, one family houses, height of buildings, devaluation of residential areas by bad policing etc)

Housing prices are results of specific policies, and people's ownership rights are protected in western societies.

[dredmorbius]

A variant on the concept is that taxes accrue whilst the present (residential) owner holds the property, but come due on sale or transfer, inclusive of inheritance.

Same would not hold for commercial or nonresidential property ownership. Presumably not by trust (e.g., shielded / non-person) ownership.

[onlyrealcuzzo]

If their family lives nearby, they probably own homes and can all sell and move together, move in with each other, move to an area not far away that's substantially cheaper, use your huge winning to build an ADU in your dear family member's backyard and be even closer together, etc...

You. Don't. Lose. By. Winning. $1M.

You get options.

[salawat]

It's all relative. If everyone else moving in can spend a mill plus, you're priced out. If you and your neighbors happen to be the only ones improving things, and the mil plus group comes in and stagnates/displaces you through gentrificative forces, requiring you to to start from scratch elsewhere.

Lets say you live long enough for the cycle to repeat multiple times. I assume proponents would say, "well, hooray, everyone but you is way better off, I guess it sucks that you weren't better at managing money", when all anyone ever wanted to do was live together and be left alone.

[int_19h]

> all anyone ever wanted to do was live together and be left alone

It's a great ideal, but the problem is that land is a finite resource, so eventually you'll run out of space that is necessary for the next group of people who want to live together and be left alone to actually do so. At which point, you either have a stark divide between those who got in their claim and those who don't, or you come up with some redistributive system that gives newcomers a chance.

[mjmahone17]

The other thing people who own land can do: take out a mortgage to build more homes on their land, live in one and either sell the subdivided land/co-op/condo units or rent them to others.

The only people who can be “driven out” are the renters, but if you let owners subdivide and build more, even they should be able to stay in the neighborhood indefinitely. It’s only once you break the chain by not building new homes that the existing community is forced to move. The original neighbors may become a minority compared to the newcomers, but the alternatives to building enough housing for everyone who wants to live in a neighborhood appears to me to be:

- make your neighborhood undesirable for even you to live in.

- make it impossible for new people to buy their way into the community.

- accept that non-owners and not-rich-enough owners will be priced out and forced to move from their homes.

[skybrian]

This is a scenario where there are no zoning rules preventing the denser housing from being built.

It might be easier to fix zoning first?

(Property that's zoned to allow more development is more valuable, but property owners are often against lifting zoning restrictions anyway.)

[int_19h]

It's usually implied in most Georgist proposals.

[mekkkkkk]

Wouldn't mortgaging and bootstrapping profitable land use become incredibly hard in a world where 100% of land value was taxed?

[zozbot234]

On the contrary, it would be easier because you'd only need to take a mortgage on the improvement value, the land itself would be very cheap. Sure, you'd have to pay ground rent to the government but that would simply offset other taxes you would've owed regardless.

[TimPC]

This is wrong under a 100% land value tax. The value of land is a perpetual income stream an if the government takes all of this value the price of land falls to $0 regardless of all the amenities that improve it. Each amenity that improves it raises the tax which captures all the additional value from that external improvement which keeps the price at $0. Only improvements on the land itself will add to the price.

Owners don't lose from property shooting through the roof under current taxation schemes but under a 100% LVT they lose their community and gain next to nothing financially because land value is entirely captured.

[ItsMonkk]

Yes, this is true.

But as tax money is raised, the local government has a choice

1. They can use the tax money to fund services.

2. They can return the tax money collected as a Citizen's Dividend.

If they don't have any need for any more services, everyone would still be able to live there. Your concern that people will lose their community are unfounded. They might decide, as the tax goes up, that they don't need a 1 mile by 1 mile plot of land, in which case they can sub-divide it and live in the area they care about. Anyone who uses less than the average amount of land ends up net positive through this process. Since land ownership tends to be skewed by wealthy land-owners, this means the majority of people receive net proceeds.

But maybe the city does want to spend these new funds on roads and infrastructure for the new people. They have correctly identified that land values will raise by more than they spend, so it is in the interests of the community for them to build. Since these services are profitable to the community, the collected dividends will now be even higher. This represents even more gains for our original garden tenders, but everyone who joined after the initial process shares in these gains.

Now that they have built more awesome stuff, the original citizens are now much better off. This city is now filled with companies moving in, providing jobs for the citizens, it's a magical process. Land values are all much higher. This means that the tax is higher, but it means that the dividend is higher. They can now either go for #1 or #2 again...

In a non-LVT world, it wouldn't make sense for the infrastructure to be built for the sole profit of the original land owners, so it wouldn't be built. Everyone is better off with the land value tax.

[TimPC]

Georgists generally believe that everyone has an equal right to all land and all natural resources. This makes the correct scale for a CD global if possible and national if not possible. The CD is a poor tool for keeping up with the cost of living when it's not highly localized. But localizing it is a form of neo-feudalism where people have wildly different entitlements based on where they are born.

[ItsMonkk]

I'm pretty sure you can have both if the tax bubbles up. You pay the local tax. That tax money then goes and pays the city tax. The city tax pays the state tax, the state tax pays the country tax, the country tax pays the global tax.

You are responsible for the improvements on your land, and you pay for the unimproved value of that land that comes from all higher levels. The local government on the other hand is responsible for local infrastructure, and pay for the city+ based unimproved value.

A landlocked country would pay less tax, a city at the mouth of a river pays higher tax, a locality with a beach pays higher tax, etc... this ensures that each level has some accountability and is incentivized to improve.

At each level is money left over after paying the tax(I hope!), and can either be invested or can be returned as a dividend.

One of the main unresolved issues with Georgism is the Disney World problem, and I believe that if you structure the tax in this way that problem goes away. Disney would simply be labeled not as a household actor, but as a city level actor.

[TimPC]

Paying CDs at multiple levels of government means that not everyone has an equal share of all land and resources. If I live in a poor part of the US I am entitled to far less in land and resources from my CDs. Many Georgists view this as neofeudal.

[robocat]

> Suddenly, property tax on everyone's $0.01 parcels shoots up from $0 to $12,000 per year

In New Zealand, property taxes are relative: the tax you pay depends on how much your property price rises relative to everybody else’s property prices. The local government has a fixed budget, which is apportioned between all the properties proportional to property values.

Example: a city has a budget of $1000. The city has two houses, one worth $100k and another worth $900k. The property taxes are $100 and $900 (ignoring fixed charges). If the houses double in value to $200k and $1800k, the property taxes are still $100 and $900.

It is important to keep this in mind when arguing about property price increases, because price increases don’t always matter.

[earleybird]

I believe that's the typical scenario.

taxes = mill-rate * property-value

If you're paying more in taxes it's either because the taxing authority decided to raise more money or your property has increased relative to your neighbours.

It all comes down to the mill rate.

[DubiousPusher]

Not most places in the U.S.

If your whole neighborhood's valuations go up you all get taxed more.

[sokoloff]

If your whole neighborhood goes up, but not the whole city/municipality, correct. If the entire tax base goes up (not just one neighborhood), you should expect the mill rate to fall.

[onlyrealcuzzo]

Does it actually, though?

In practice - aren't tax rates changed based on politics?

[DubiousPusher]

This is not the case where I live. Levy rates are set in statute.

[Brian-Puccio]

> The inhabitants don't lose. > > Play your scenario out. > > A bunch of poor people buy 100 acres of land for $1, and they turn it into a paradise.

Yeah but instead it’s people who cannot buy land who rent their homes who make their community better only to be priced out.

> No owners “lose”

Right and for all the people who aren’t wealthy enough to own land who get priced out of their neighborhoods and have to move? Often further from places of employment?

The comment you replied to said “let's say there's a neighborhood of people who are quite poor but charitable toward one another”. Poor people buying 100 acres of land for $1 is not a “neighborhood of people”.

Your scenario is buying cheap land in hopes one day it’s expensive — basically a long shot lottery ticket.

[onlyrealcuzzo]

> Your scenario is buying cheap land in hopes one day it’s expensive — basically a long shot lottery ticket.

Or literally all of Los Angeles 30+ years ago. Or basically everywhere desirable today 30+ years ago.

[jjav]

> Well guess what?

> Now they're millionaires.

The difficulty with this reasoning is that it assumes that homes (and the land they sit on) have only economic value and nothing else matters.

> No owners "lose" from property values shooting through the roof.

In the story you just described they lost their homes they had built up and loved.

For many people, a bunch of cash doesn't replace that.

[josephcsible]

They didn't lose their houses. They sold them. When ownership of your house goes to someone else, you lost it if your bank balance stayed the same, but you sold it if your bank balance went up by the value of the house.

[jjav]

> They didn't lose their houses. They sold them.

They lost their homes which is not just a house. There's a much more emotional aspect to a home that can't be expressed in merely dollars.

They were also forced to sell in the story, it wasn't a choice.

[onlyrealcuzzo]

> They lost their homes which is not just a house.

You want me to feel sorry for someone who gets a Million dollar windfall when:

1) they got a million dollar windfall

2) they now have a ridiculous amount of options (because money = options)

3) if they're really determined to stay in their house, they can cash-out refinance continuously and use some of the unrealized gains to pay property taxes (and past cash-outs)

4) they could also build an ADU on their property and rent out the ADU to cover property tax + have extra money

5) If they actually do move and leave, it's because they preferred $1M do the other options

No, sorry.

This is like feeling sorry for people who win the lottery because they have to pay taxes and then everyone calls them for a favor.

Most things in life aren't ALL good.

[jjav]

> 1) they got a million dollar windfall

You're looking at it stricly as if housing was a investment to be cashed out, as opposed to a place to settle down and live life.

There is no windfall. They got kicked out of their home by being forced to sell it.

Is the $1M a lot? Well, they are now homeless. If the property values rose so much that they got the million, all other properties rose as well and being now homeless they still need to buy a new home. It'll have to be much smaller or maybe there's nothing affordable available anymore so they have to uproot life (jobs, schools, friends, family, doctors) and move to a much cheaper city.

Very cruel, and all because some richer people want to move in and take over? That's the kind of abuse that leads to things like Prop13.

> #3 cash-out refinance continuously

This is completely unrealistic. You can't pay a recurring cost by going farther into debt every year if you can never pay it back.

[salawat]

They got a million dollar windfall in a market now shifting to where the average buyer is in a position to drop a million plus without blinking.

You can be poor, even with a million in such a market, and all that happens if you move somewhere cheaper to start again, is you perpetuate the cycle.

[mekkkkkk]

Both things can be true at the same time, though. They lost their house because they were forced to sell it.

[notahacker]

In reality, I think the scenario plays out a bit more like this:

A bunch of poor people buy some cheap land with very low taxes because its a run down scruffy mess with no facilities.

The land stays a run down scruffy mess with no facilities because the local property owners have strong financial incentives to keep it that way

Incremental increases in the land value tax would make low income landowners hungry long before the land rose in value enough to make anyone millionaires, and land isn't exactly easy to sell quickly, especially not if it's marginally-less-shitty-than-before land with an uncertain future.

[onlyrealcuzzo]

In reality, it works like Los Angeles and The Bay - and everyone who (owned) and gets priced out ends up with a massive windfall at some point.

How massive depends on how long they stay into the boom.

Again, no one ever loses (financially) from prices going up.

All you get are options (financially).

If your home is direly important to you, and being close to family is important, too - you still have options.

1) Sell and move in with family and use your gains to help offset their property tax

2) build an ADU in your backyard / convert your garage to an apartment - and use the rental income to pay your fair share of property tax - plus have the majority left over for spending

3) continuously cash-out refinance to pay your property tax + your previous cash-out

No owner loses (financially) from property prices exploding.

[notahacker]

Los Angeles and the Bay Area provides massive windfalls to property owners because the State of California's tax system is not based on the Georgist principle that 100% of the "unearned increment" of land value appreciation should be taxed away.

And in the case of the Georgist system being discussed, a typical poor person who is living on a typically tight budget and typically doesn't own very much of their home equity has very strong financial incentives to avoid unaffordable tax rises. Sure, they still have "options" to pay that bill, just like unemployed people also have "options" to sell and move in with family, take on lodgers or refinance, but if the consequence of house price rises from are that you have to choose between sharing, moving or paying refinancing costs on your house it's definitely not a windfall. And they're not finally priced out of an area when it's a million pound plot attractive to developers who want to build condos, they're priced out of their still-very-undesirable area as soon as the LVT bumps up 20%, perhaps because some well meaning citizen planted flowers instead of syringes in the local park.

The other option, of course, is to try to keep your house in line with your cost of living by attempting to thwart all attempts to generally improve the area. I think it's pretty obvious a lot of people will choose that...

[plasticchris]

Assuming there are ample buyers, and no predators waiting in the wings for distressed sellers who cannot afford the taxes.

[bombcar]

Just because one shot you in value doesn’t mean anyone else will ever want or bother to buy anything there again.

But it can be worked around.

[stickyricky]

> What gives?

It's a law. You can just put in exemptions.

- "Land tax increases shall not exceed X% if it is your primary residence."

- "Land tax shall not increase if you are over the age of 65".

- "You may deduct monies put into the improvement of a property from your land tax."

- "You may not pay more than 5% of your income in land tax".

I don't see the issue. We don't tax income at 20% with no deductions. We don't place a sales tax on all goods equally. We don't tax corporations the same way we do individuals.

[colinsane]

in the UBI version, the tax is purely redistributive. each of the 10 inhabitants pays some $ figure proportional to their monopoly use of the land, and then receive the sum divided by 10. if all inhabitants own roughly the same sqft, it has no real effect.

in the case where Georgist tax is used to fund public works, things look identical before outsiders move in. the inhabitants are taxed into some fund, and now receive payment from that fund for their charitable improvements. it’s a closed economy. however, once a non-charitable neighbor moves in, they too are taxed but do not receive anything from this communal fund (since they aren’t working to make communal improvements). now, the 10 original inhabitants continue to make those original public improvements they enjoyed making, and as a bonus, they all receive a little extra for their work.

depending on who you are, maybe you don’t like the idea of having “freeloaders” as neighbors, even if you’re materially better off for it. there are a few knobs you can tweak to shape the kind of neighbors you attract more explicitly (e.g. the $/hourly rate the community fund pays for labor, the rates associated with property taxes, etc). the key is that this tax is levied as part of a closed labor economy. you’re effectively monetizing the labor each neighbor was already investing into public spaces. the average neighbor sees no difference in their $ balance as before: no threat of not being able to afford to stay. UBI does better at protecting the elderly, community improvement fund better at protecting the hard-working/able-bodied.

[lazide]

By 'lose the land', really they'd be forced to sell or go bankrupt/accrue tax debt.

Which is pretty terrible if the folks are little old ladies settling down to avoid the cruel harsh world, and now need to find somewhere else to live when they are least capable of doing so (being on a fixed income and all).

The 'can't put old widows out of their homes' scenario is why California's Prop 13 came to be, btw. Even without Georgist taxation, property taxes got too high to pay. I imagine a lot of folks in Texas and other less dense areas are going through this right now due to the rapidly increasing property values and less controlled changes in taxation.

It does cause change and turnover instead of stagnation in an area though.

[curun1r]

> The 'can't put old widows out of their homes' scenario is why California's Prop 13 came to be

There’s a better way to handle this, though, than the Prop 13 approach of limiting taxes. You just allow a certain amount of property taxes to optionally go unpaid and accrue as a lien against the property that must be settled when the property changes hands. Old widows never get forced out of their houses, but they don’t get to leave them to their kids without paying the tax.

[entangledqubit]

... or you accept that the widow argument was a bogus special interest ploy to begin with and have people who genuinely need a prop 13 style exemption apply for an exception - rather than have it apply to everyone. From what I understand, Seattle does it this way.

[jjav]

> ... or you accept that the widow argument was a bogus special interest ploy

It's not either/or. The old lady (old guys don't like to be kicked to the street either) argument was very real and causing a lot of pain for real regular people.

It's also true that the special corporate interest saw an opportunity and sneaked in to a law that never should've applied to them.

[lazide]

How is everyone going to get rich then?!?!

[bilbo0s]

Your suggestion is not bad, but I like HN User "stickyricky"'s suggestion better. It's more all encompassing. Would certainly be nice to maybe stack this on top of his suggestions.

[Aunche]

>The 'can't put old widows out of their homes' scenario is why California's Prop 13 came to be

That's the Prop 13 lobbyist's excuse. In reality, these old widows are never at risk of being kicked out of their house at all. I'm sure plenty of investors would be willing to pay off the widow's taxes in exchange for ownership of the property after they pass.

[salawat]

Which guarantees the centralization of assets in the hands of a monied few. You might as well just write carpetbagger on your forehead. It's quite clear the outcome you're vested in. The entire concept of an estate existing to anyone but the already well-heeled would become even rarer than it is now.

If you want to invest, go solve a problem that isn't creating a predatory pressure on the real estate market. Homes and property should be affordable. Not investment vehicles, or somewhere to hide cash from that nasty inflation.

[Aunche]

What a ridiculous assertion. Either you're a carpetbagger yourself or you're simply completely ignorant to economics. We're talking about the most progressive form of taxation here that most affects the wealthy. Any revenue generated from land taxes is revenue that doesn't have to taxed from income or sales, so regular people would be able to accumulate a much larger estate to begin with.

>Not investment vehicles, or somewhere to hide cash from that nasty inflation.

Exactly, which is the point of disincentivizing people of treating it as an investment...

[lazide]

For Boomers, their homes are one of the few investments they've done as a class that has actually paid off. It's the source of the 'millionaire next door' and the basis of a large portion of that generations nest eggs.

Oops.

[mjmahone17]

Unless the laws are bad, if property taxes are going up to the point you can’t afford them, why wouldn’t you rent out enough of your high value property to pay them, and live in the rest? That might mean building an ADU or a multi-family unit where you live in one of them, but I don’t see why “people will need to move when their homes rise in price” is a legitimate argument. Unless the laws prevent you from both living on and also making money from owning the same land.

[lazide]

The laws mostly prevent this yes. Either from zoning, or logistics. Not many single income retirees can pull off constructing an ADU on their own property.

[frankus]

That's an interesting dilemma. I don't think Georgism fully solves the issue of returning community-created value to the community members who contributed to it. Of course the same is true under the current system for anyone who rents their residence.

I think the ideal outcome would be to just build additional housing for the people who want to move there, i.e. split the tax per unit land across more units of housing, since that's what the market is indicating that it "wants".

Of course most of the Anglophone world is doing a terrible job of adding housing in high-demand areas, and I'm not clear whether and how that would change under a Georgist regime.

[TimPC]

If you switch to Georgism without fixing zoning it ends up worse not better. Zoning my land as suitable for a high-rise can destroy the entire value of my home because it becomes an unusable structure due to the higher rates of tax. At the same time zoning my land for high-rise causes the value to go up and that results in a massive tax increase that eliminates any price gain for my land. Since I so firmly don't want my land to be upzoned I become a NIMBY and compromise with my neighbors to also protect their land from upzoning. We all elect politicians that oppose all upzoning. Some Georgists argue that I'm supposed to want my neighbors upzoned because it raises my CD but they seem to have not done the math because if you're applying the CD over the entire US then upzoning a single neighbor raises my CD by fractions of a cent which I care so little about that it doesn't change the incentives for this political alliance.

[kodah]

I've always called this "state-to-state" income inequality, because it used to be that people from relatively wealthy states would "retire" (probably not actually retire) in lower income states because they can purchase a home with less friction.

Nowadays, the income inequality gap has grown drastically in each state, so I think this problem just falls under that umbrella. A good source: https://www.cbpp.org/blog/a-state-by-state-look-at-income-in...

[hibikir]

The problem with this is that states are very poor boundaries for almost any economic and demographic indicator: A US state is a mostly arbitrary collection of rural, urban and suburban people, which happened to be put together a few hundred years ago, and which have relatively few economic ties with people from different groups. A big difference among states is just how much of each group we get, plus a small multiplier between big, successful metro areas, and those that are not. How different is it to live in northern Illinois, vs south east Wisconsin? It's still really the Chicago metro area, and the state is mostly irrelevant. The same on both sides of the Kansas City metro.

When you are measuring income inequality within states, all you are seeing is that the largest metro areas are in almost all cases getting richer, while rural areas poorer. It's not a matter of rich states and poor states at all. For almost anything that matters, those state lines are just confounding your statistics.

[kodah]

Yeah, I see your point. I do think there's something to do with a state having a concentration of wealthy people who then move. That, at least, seems problematic. I do think people, these days, are incentivized to do that because although we may look at them as wealthy they may have trouble affording where they're from. I don't even know what you do with that.

[kodyo]

There are some undefined variables. Did the people doing the improving own the land? Well, now they're no longer poor. Yay. Sell and get out of there before the Californians move in and turn it into a sewer.

If they voluntarily improved somebody else's land under no contractual agreement with the owner, why do they think they're entitled to a share of the new value?

If they voluntarily improved "public" land, good luck extracting gratitude from the state after the fact. The bureaucrats are more likely to issue fines and send in bulldozers.

[threatofrain]

> If they voluntarily improved somebody else's land under no contractual agreement with the owner, why do they think they're entitled to a share of the new value?

> If they voluntarily improved "public" land, good luck extracting gratitude from the state after the fact. The bureaucrats are more likely to issue fines and send in bulldozers.

I wonder if this is a fringe example as I imagine few people are radically improving public land, esp. to such extent that it's causing a real estate rush. We might then go across not only the country but to other nations like Canada and ask what proportion of real estate booms are due to this scenario.

[jandrewrogers]

A small version of this occurs in the Mountain West. Some well-maintained rural roads are actually maintained illegally across Federal land by the locals. The Federal government is responsible for maintenance but often doesn't do any for decades and so the roads go into severe disrepair. If you ask permission to repair the road out of your own pocket, you will have to file absurd amounts of paperwork and the Federal government charges you money for the right!

Some of the local illegal road repair crews are well-organized. They descend like a flash mob with heavy equipment when the odds of getting caught are near zero. The Feds are incurious about who is maintaining the roads illegally because it is kind of doing them a favor.

I first learned about this when I naively started jumping through the hoops to get permission to repair a remote road. One of the local ranchers heard about it, pulled me aside, and explained how things worked while admonishing me for ruining my plausible deniability. The whole thing was wild.

[bombcar]

Stuff like this is way more common than just roads.

The further you get from the lawmakers the more reasonable actuality gets, even if it is done plausibly deniable.

[disgruntledphd2]

Heaven is high, and the emperor is far away.

[kodyo]

I agree, I doubt it's much of a real thing, but the hypothetical got me thinking.

[8note]

> If they voluntarily improved somebody else's land under no contractual agreement with the owner, why do they think they're entitled to a share of the new value?

Because property rights are garbage? If they improved it, they should gain ownership

[Schroedingersat]

In concept the answer is simple (although avoiding loopholes is difficult).

If it's your only residence then you get to cap the tax on one unit of housing worth of land at max(x% of income, y% of net wealth excluding that particular unit of land).

In your scenario the poor locals must subdivide and sell or commercialise some of their land, but get to continue benefiting from the commons they have built even if they have 0 income and survive purely off of that commons.

[tuatoru]

Every system has downsides. The question is, is "having to make an immense moneetary gain at the cost of your connection to the trees you planted and the closeness of your neighbors" worse than the system we have now, and for whom?

Again: No system is perfect. It seems to me that the Georgist approach would tend to lay the tax burden more evenly on people of all levels of wealth, even if it does force some people to sell and buy.

[jlhawn]

> As a result, other people want to move in

> Their own charity and neighborliness spelled their doom

is allowing more homes not possible? If not, then where’s that “neighborliness” now?

[TimPC]

Improvements as defined in Georgism are the things you add to your own land that increase its value and don't include things added on other land. This is unfortunate when you take part in building community improvements but makes far more sense on average since the typical situation with most external improvements is that few people take part in them. I think in practice what happens is people end up balancing affordability and are strategic about the improvements they want made.

[ZeroGravitas]

Why would people want to move into an area without roads, police, doctors, power and the other basics of modern life?

If they do, because they exist, then who pays for providing those things?

[thaumasiotes]

I see a different problem with the separation.

In the modern day, the improvements may contribute more than 100% of the value of the land. In most cases the sole benefit of having land in a desirable city is that it is near other desirable things. This is unlike the agricultural model motivating Georgism, where the primary benefit of owning land is that you can grow crops on it.

But taking the proposal literally that we can tax land based on the improvements existing on other nearby land, but not based on the improvements made to the same land being taxed... there is a very obvious implication. Land will end up being owned in such massive chunks that the land value tax goes back down to zero, because we subtract away the entire value of the area when calculating the tax.

Consider a small plot of land in Los Angeles. It's relatively close to Hollywood, and a lot of other nearby amenities. In its unimproved state, it's a swamp unfit for human habitation, but it is so advantageously located that we can attribute a lot of value to it anyway.

But if the same person owns the entire region of California around Los Angeles, its unimproved state is still an uninhabitable swamp... and because he owns the entire area, there are no improvements nearby to raise the value of the land to the point where he'd have to pay taxes on it. The film industry is an improvement to the land, which we don't want to tax. The port of Long Beach is an improvement to the land, which we don't want to tax. (There is not any fundamentals-based reason to locate a port there - it was constructed as a union-busting exercise, not because of geography.) The fact that millions of people live there is an improvement that we don't want to tax.

It makes no sense to base our tax assessments on how concentrated landownership is, but that is the Georgist proposal.

[kcb]

I still don't understand how Georgism makes any sense in a digital world. The biggest companies in the world require irrelevantly small amounts of land to operate. A person can make millions in a 10x10 box with a computer.

[perilunar]

Modern Georgists extend 'land' to all natural resources. So minerals, water, radio spectrum, and importantly, 'right to pollute' (e.g. CO₂ emissions) would all be included and taxed.

If you create something without using any natural resources, then you shouldn't have to pay any taxes on it — it all belongs to you. Well done! If a large company does it then same — it's good to use less resources, and taxing their use encourages people to use less. But you will still probably want to live somewhere (and eat food grown somewhere, and drink water that fell somewhere), and you pay tax on what you use, instead of the income you generate.

Georgism is about taxing resource consumption, not income.

[thaumasiotes]

Consider a stylized company town - there's one major employer in the town, they provide a stable population base (their employees, plus family members) which demands various goods and services, and so a town exists.

If the employer leaves, the town will be unable to sustain itself, everyone will leave, and the land will return to the wild.

Given this setup, under Georgism, what is the amount of property tax the major employer should pay? The correct amount of tax would appear to be negative.

[larsiusprime]

And yet real estate is still the world's biggest asset class, amounting to some 68% of all real assets worldwide:

https://www.gameofrent.com/content/is-land-a-big-deal

and the vast majority of that real estate's value is in land

[thaumasiotes]

> and the vast majority of that real estate's value is in land

Is that true? Most of the value derives from the location - if you doubled the floor space over the land, the value of the land+improvements would double. The land isn't contributing value.

[TimPC]

land value is mostly location value. Land value captures all improvements that aren't on the property itself.

[boomboomsubban]

Your issue is "what if someone owns huge chunks of land and doesn't try to make any money off it?" Then Hollywood gets built somewhere else where someone does want to make money. And eventually, those improvements may make the land the other person owns worth more money anyway and they'd be unable to pay the taxes.

[salawat]

This is why Georgism is just an urbanizer's ideal; a gentrification engine, if you will.

It emphasizes putting things in the hands of someone that wants to do something with it rather than just maintaining ownership as an option until a voluntary sale is desirable for the occupant.

Gee. I wonder who could ever be behind a push to make it easier for developers and real estate investment firms to utilize artificially created economic pressure to rearrange the ownership landscape, while also pushing all incentives in the direction of urbanization above all else.

[boomboomsubban]

Right, Georgian is some fraud being pushed by the developers and real estate firms who currently have such little power to incentivise the direction of the ownership landscape. If a real estate magnate ever did something like become president surely they'd push Georgism through.

[boomboomsubban]

Autocorrect changes "Georgism" to "Georgian." I caught it the second time but missed the first.

[thaumasiotes]

> Your issue is "what if someone owns huge chunks of land and doesn't try to make any money off it?"

That really has nothing to do with my issue.

My issue is that, under the proposed system, two people who each own half of Los Angeles will pay a lot of property taxes, because the other half of Los Angeles adds taxable value to their half, even if their half is unimproved.

But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden. Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!

The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?

[Kbelicius]

> My issue is that, under the proposed system, two people who each own half of Los Angeles will pay a lot of property taxes, because the other half of Los Angeles adds taxable value to their half, even if their half is unimproved.

That is the goal, isn't it. To remove speculation from land ownership. Under this model the owner of the unimproved part of LA has no right to the increase in his land value since he did nothing to improve it. He either continues paying increasing taxes, sells it, or starts improving it. I see no bad side to it.

> But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden.

What would be this persons incentive to own all this land under this model? Besides, somebody on the edges of this property starts some development and suddenly LA owners taxes raise.

> Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!

This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land. Why do you think that landlords are entitled to value created by somebody else?

>The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?

I agree, it doesn't make any sense. Luckily, your conclusion doesn't follow from anything that you wrote. The total amount of tax owed is different depending on the value of the land. Do you think that that also makes no sense?

[thaumasiotes]

> What would be this persons incentive to own all this land under this model?

It would lower their taxes.

> This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land.

Please don't bother responding if you have no idea what you're responding to.

[Kbelicius]

> It would lower their taxes.

So the incentive to holding unimproved land from which you derive no profit would be so that you would pay less tax then if you would made improvements and profit from those improvements.

> Please don't bother responding if you have no idea what you're responding to.

You should follow your own advice.